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The relationship between in-house counsel and private practice.

A supportive and open partnership between in-house counsel and their legal panel firms is a crucial ingredient towards fostering a mutually beneficial relationship. However, is there more to consider? Over recent years, in-house counsel has enjoyed a rise in status as corporations seek to leverage more value from within. This evolution has lured high-profile lawyers out of private practices to head up in-house teams. Armed with knowledge of legal firm margins, in-house counsel has applied greater scrutiny to the cost of legal services. While this approach may address short-term financial pressures, we question if it creates greater value in the longer term. There are always two sides to the story, with panel firms questioning the archaic processes imposed upon them. As an independent observer of the industry, we are often astonished at how much simpler it could be to achieve more effective outcomes through the use of available technologies to systemise the processes between both parties.

A key issue is the high level of administration panel firms must adhere to, without what appears to be sufficient consideration to the cost this imposes upon both parties. With the panel firms motivated to pass on such costs, this does nothing to improve the mutual value of the relationship. Further, the investment made by panel firms in infrastructure and resources to meet these requirements, often precedes an expectation that volume work will follow. However to create competition, in-house teams are engaging more panel firms, reducing work volumes and therefore discouraging stronger relationships. This is a complex issue while in-house legal teams are viewed as cost centres and their value is often limited to the ability to minimise legal expenditure. So how can the problem be addressed?

In Australian the industry has not sufficiently embraced technologies that automate processes and/or enable online collaboration. Unlike purpose-built systems used within international firms, Australian law firms tend to develop home-grown solutions to service in-house counsel, which are cumbersome and limited in functionality. Investing in better technology and building contemporary business processes often goes a long way towards reducing the cost of business. Perhaps improving automation and collaboration is a worthy investment to consider for firms seeking selection onto legal panels.